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Top 5 tips for avoiding the pitfalls of first-time property investment

First-time property investment tips

Property investment is a hot prospect in the market at the present time, overtaking other assets like gold and stocks and shares to become the most prominent option for buyers.

Despite the economic uncertainty that has been prevalent at various times in the last decade, the property market has proved a resilient, growing and adaptable option, which has seen it become a strong option for buyers, with 45 per cent of people saying in an Experience Invest survey that they would choose to invest in property over other assets if they had the option.

However, even though property is a fantastic prospect for investors, it can still be a daunting prospect for newcomers to the market.

Here are some investment tips for property beginners to help avoid the most common, and easiest to make, mistakes.

Choosing what you like

If this is your first-time property investment, then chances are you’ve only ever purchased a home that you wanted to live in before now. While this gives you some experience of the process, it won’t pay to treat the process in the same way. You may even be thinking about buying an investment property before your first home.

When it comes to viewing, choosing and buying a home, it’s all too easy to get hung up on what you like and where you would want to live, but you need to take your owner hat off and put your investor hat on to find success. Ask yourself who your targeted tenants are, and what they want and need from a home first and foremost before you pull the trigger on investing.

Buying in the wrong area

It might be tempting to dive in and buy the first home you see for sale, but don’t. Take some time to look into the best areas for property investment, and don’t just believe what you’ve heard. For example, you might know that the average rental price in London is above £1,500 pcm, and this is lucrative for landlords, but this is not necessarily the case.

When you’re investing for the first time, you want something that’s steady, growing and in demand. Areas like Manchester, Leeds and Liverpool, all of which have housing stock shortages and growing professional populations, are fantastic places to buy for first-time investors. Not only are they a little cheaper than other areas, but they promise strong rental growth for some time to come.

Not taking advice

As a first timer buying an investment property to rent, it’s important to accept that you will need help with your investment. No one can get it from the off and know everything straight away, so you need to speak to a financial advisor.

Your advisor will be able to recommend what you should spend on property, what sort of mortgage you will be able to obtain and how much you would need to charge in rent to make a profit or cover repayments (although it can also be a good idea to talk to letting agents at this stage).

First-time property investment can be complicated. You need to know about taxes, Stamp Duty and other costs associated with investment you may never even have thought of, so always seek out advice from a trusted source before you buy.

Looking for short-term gains

The property market has changed in the last decade, and this is no different for investors. In 2007, people were buying homes and flipping them all over the UK, able to make huge profits in relatively short periods of time.

However, it’s all change, and in 2017, seeking out short-term gains is a riskier game to be playing. It’s all about the long term in the new market, and those investing in property need to be aware that while it may take a while, the consistent rise in rental prices and demand mean that profits in the long run are shaping up nicely.

At the moment, there are some five million private tenants in the UK, and it’s rising all the time. This demand not only guarantees long-term growth, but also a more stable, less risky investment.

Buying the wrong type of home

Finally, it pays to make sure that as a first-time property investor, you are buying the right kind of property for your tenants. For example, there’s no point in spending big on a three-bedroom home in the suburbs if you are looking to let to students.

You need to know what tenants want from their home. Location, build and amenities are all important things to consider, but it can be easy to get these wrong and end up with something that people looking to rent in your area just don’t want.

One of the best ways to get started in real estate investing is by contacting specialist property investment companies. Experience Invest can guide you to a much easier choice when you are buying rental stock, however. With off-plan investments in build to rent homes, you know you are getting purpose built property investments that are being constructed with your tenants in mind, whoever they are, leaving you far more likely to secure tenants time and again.

Whilst Experience Invest has an office in Hong Kong, the company and individuals representing Experience Invest are not licensed to and do not deal with any property situated in Hong Kong. Experience Invest is only authorised to market and to sell properties which are based in the UK.

Whilst Experience Invest has an office in Hong Kong, the company and individuals representing Experience Invest are not licensed to and do not deal with any property situated in Hong Kong. Experience Invest is only authorised to market and to sell properties which are based in the UK.